Defeat by the 2006 Champions meant that Wales got fourth place in the overall classification - an achievement last realised in Chile at the 2001 World Championships.
Despite suffering three defeats in five games, against Australia and New Zealand twice, Coach Justin Burnell will have been pleased at doing the best of the Northern Hemisphere sides.
Australia did most of the attacking in the first quarter but the Welsh defence was solid with skipper and Glamorgan Wanderers No.8 Sam Warburton, flanker Nic Cudd, lock Josh Turnbull (both Llanelli) and Bedwas wing Jimmy Norris all distinguishing themselves.
Against the run of play Wales scored a try when Bridgend scrum half Rhys Webb charged down a kick by Aussie fly half Brett Gillespie, gathered and sent in Brynteg CS centre Tom Williams - nephew of the great JPR - for Neath wing Leigh Halfpenny to add the points.
The Wallabies replied with a try from a line-out by hooker James Hanson converted by scrum half Jason Ryan before they were shaken by a quick duo of Welsh tries.
Williams created the first to send fly half Gareth Owen in before the other centre Rhys Williams (UWIC) cut through the middle and put Norris over. Halfpenny's conversions turned the screw with Australia glad to get a Ryan penalty just before the break to trail 21-10.
Welsh confidence was high but two penalty misses by Halfpenny did not help the cause, all the more so when Aussie wing Andrew Barrett squeezed in past three defenders.
Australia were revitalised and as Wales tired, good inter-passing got wing Alfi Mafi over, Ryan converting for a 22-21 lead.
A late penalty from Ryan did for Wales, who had given their all but could not sustain their first-half form.
Tries: T Williams, G Owen, J Norris
Cons: L Halfpenny (3)
Tries: J Hanson, A Barrett, A Mafi
Cons: J Ryan (2)
Pens: J Ryan (2)
Matchday 5 Results:
11th place play off: Fiji 60 - 12 Japan
9th place play off: Ireland 34 - 0 Scotland
7th place play off: Argentina 12 - 13 Samoa
5th place play off: France 43 - 17 England
3rd place play off: Australia 25 - 21 Wales